PITTSBURGH, April 26, 2016 /PRNewswire/ -- CONSOL Energy
Inc. (NYSE: CNX) reported a net loss from continuing operations of
$50 million for the quarter, or
($0.22) per diluted share. When
including the loss from discontinued operations, net of tax, of
$46 million, less net income
attributable to noncontrolling interest, the company reported a net
loss attributable to CONSOL Energy shareholders of $98 million or ($0.43) per diluted share.
(Dollars in
thousands)
|
Q1
2016
|
Loss Before Income
Tax
|
$
|
(77,133)
|
|
Income
Taxes
|
(26,847)
|
|
Loss From
Continuing Operations
|
(50,286)
|
|
Loss From
Discontinued Operations, net
|
(46,172)
|
|
Net
Loss
|
(96,458)
|
|
Less: Net Income
Attributable to Noncontrolling Interest
|
1,114
|
|
Net Loss
Attributable to CONSOL Energy Shareholders
|
$
|
(97,572)
|
|
Earnings before deducting net interest expense (interest expense
less interest income), income taxes and depreciation, depletion and
amortization (EBITDA), from continuing operations were $133 million for the 2016 first quarter, compared
to $234 million in the year-earlier
quarter.
After adjusting for certain items, which are listed in the
EBITDA reconciliation table, the company had an adjusted net
loss1 attributable to continuing operations in the 2016
first quarter of $16 million, or
($0.07) per diluted share. Adjusted
EBITDA1 from continuing operations was $176 million for the 2016 first quarter, compared
to $242 million in the year-earlier
quarter. Cash flow from operations in the just-ended quarter was
$128 million, compared to
$228 million in the year-earlier
quarter.
The first quarter earnings results included the following
pre-tax items related to recent transactions attributable to
continuing operations:
- Recorded a $29.3 million
unrealized loss on commodity derivative instruments;
- Recorded a $12.6 million loss
related to the sale of a gathering pipeline;
- Recorded $2.9 million in expense
related to severance.
"CONSOL continues to focus on executing its free cash flow
plan," commented Nicholas J.
DeIuliis, president and CEO. "Through continuing to reduce
unit costs, benefiting from capital efficiency improvements, and
selectively monetizing assets, CONSOL generated $449 million of free cash flow1, which
includes $35 million of organic free
cash flow from continuing operations1 when
excluding the recent sale of the Buchanan Mine. Our free cash flow
plan has further strengthened our liquidity position and balance
sheet, while positioning us for future success."
1 The terms "adjusted net loss," "adjusted EBITDA,"
"free cash flow," and "organic free cash from continuing
operations" are non-GAAP financial measures, which are defined and
reconciled to the GAAP net income below, under the caption
"Non-GAAP Financial Measures."
During the quarter, CONSOL Energy announced the sale of the
Buchanan Mine, along with certain other metallurgical coal
reserves. The total transaction value was approximately
$460 million: $425 million in cash, including $403 million of cash received at closing and
$22 million of cash held in an escrow
account for up to two years; $23
million in net accounts receivable/payables that CONSOL will
receive following the close of the transaction; and $12 million associated with legacy liabilities
that the buyer assumed. In addition, for Buchanan Mine coal sold
outside the U.S. and Canada during
the five years following closing, the buyer agreed to pay CONSOL
Energy a royalty of 20% of any excess of the gross sales price per
ton over the following amounts: (1) year one, $75 per ton; (2) year two, $78.75 per ton; (3) year three, $82.69 per ton; (4) year four, $86.82 per ton; and (5) year five, $91.16 per ton. This earn-out provision provides
CONSOL the opportunity to capture future upside if metallurgical
coal prices recover. Since the transaction effectively closed on
the last day of the first quarter, transaction proceeds reside as
cash on CONSOL Energy's balance sheet. Following the end of the
first quarter, CONSOL used the cash proceeds to pay down its
revolving debt in an effort to increase liquidity and further
de-lever the company. CONSOL Energy estimated the full year 2016
EBITDA contribution associated with the Buchanan Mine, net of the
carrying costs of the other metallurgical coal assets included in
the transaction, to be approximately $20-$25
million.
"The Buchanan sale is significant for a number of reasons,"
commented Nicholas J. DeIuliis,
president and CEO. "Not only does this divestiture support our
corporate strategy, it also brought forward substantial value, at a
premium multiple valuation. That said, this transaction was a
win-win for both us and the buyer, who will benefit from this
premier mine becoming their flagship operation. For CONSOL, the
sale of Buchanan marks another large step towards executing our
strategy of becoming a pure-play E&P company."
On April 20, 2016, the company's
lending group reaffirmed the bank facility's $2.0 billion borrowing base. "The reaffirmation
marks another step to further maintain our already strong liquidity
position," commented David M. Khani,
executive vice president and CFO. "We appreciate the support of our
lenders who have recognized how we have differentiated ourselves
through our strong asset base and organic free cash flow plan."
During the first quarter of 2016, CONSOL's E&P Division
achieved record production of 97.5 Bcfe, or an increase of 36% from
the 71.6 Bcfe produced in the year-earlier quarter. The E&P
Division's total unit cash costs declined during the quarter to
$1.33 per Mcfe, compared to
$1.70 per Mcfe during the
year-earlier quarter, or an improvement of approximately 22%, which
benefited in part from the company's dry Utica
wells.
Marcellus Shale production
volumes, including liquids, in the 2016 first quarter were 51.2
Bcfe, or 39% higher than the 36.8 Bcfe produced in the 2015 first
quarter. Marcellus Shale total unit
cash costs were $1.44 per Mcfe in the
just-ended quarter, which is a $0.11
per Mcfe improvement from the first quarter of 2015 costs of
$1.55 per Mcfe.
CONSOL Energy's Utica Shale production volumes, including
liquids, in the 2016 first quarter were 22.9 Bcfe, up substantially
from 9.6 Bcfe in the year-earlier quarter. Utica Shale total unit
cash costs were $0.85 per Mcfe in the
just-ended quarter, which is a $0.46
per Mcfe improvement from the first quarter of 2015 total unit cash
costs of $1.31 per Mcfe. The
significant cost improvements across the Utica Shale were primarily
driven by reductions to lease operating expenses.
CONSOL Energy's total Coal Division sold 5.7 million tons from
continuing operations in the 2016 first quarter, compared to 7.0
million tons during the year-earlier quarter. The Board of
Directors of CNX Coal Resources' LP (NYSE: CNXC) General Partner
declared a cash distribution of $0.5125 per unit to all unitholders for the first
quarter of 2016. The distribution will be made on May 12, 2016 to unitholders of record at the
close of business on May 5, 2016.
The unrealized loss on commodity derivative instruments
represents changes in fair value of all existing commodity hedges
on a mark-to-market basis.
The company recorded a loss related to the sale of a gathering
pipeline, located in Monroe County,
Ohio, to a third party. During the quarter, CONSOL executed
a gathering agreement and midstream asset sale for $7.7 million of cash received at closing. CONSOL
expects the sale and the gathering agreement, which was secured at
favorable prices and terms, to eliminate future capital
expenditures and reduce operating expenses as they relate to
Monroe County, Ohio.
During the quarter, the company also recorded an expense related
to severance, in connection with the company's continuing effort to
reduce operating expenses.
Starting this quarter, CONSOL Energy has made certain
adjustments to the financial statements to reflect the sale of the
Buchanan Mine, which is now reflected under "Discontinued
Operations." CONSOL Energy also made reclassifications within our
financial statements to better align our financial reporting with
our peer group. These reclassifications impacted the "Lease
Operating Expense," "Transportation, Gathering and Compression,"
"Direct Administrative and Selling," "Production Royalty Interests
and Purchased Gas Sales," "Production Royalty Interests and
Purchased Gas Costs," "Operating and Other Costs" and "Selling,
General and Administrative" line items on our Consolidated
Statements of Income. These changes are reflected in our current
and historic Consolidated Statements of Income, with no effect on
previously reported net income or stockholders' equity. To reflect
these changes, CONSOL Energy has recast historic income statements
that can be found on the CONSOL Energy website
(www.consolenergy.com), or click here.
E&P Division:
E&P Division First Quarter Summary:
E&P production increased by over 36% in the just-ended
quarter, compared to the year-earlier quarter. Despite increased
production, the E&P Division realized a net loss of
$14.2 million in the first quarter of
2016 due primarily to lower commodity price realizations.
CONSOL's E&P activity continued to focus primarily on
completing its high quality Marcellus
Shale wells in Greene and
Washington Counties in
Pennsylvania. The company's Green
Hill Marcellus Shale wells in Greene
County, Pennsylvania, have exceeded original expectations,
with estimated ultimate recoveries (EURs) now between 2.8-3.0 Bcfe
per 1,000 feet of lateral. During the quarter, CONSOL completed 11
wells: the 10-well GH53 pad and the 7,900 foot NV36F Marcellus Shale well, which incorporated testing
plugless completions. CONSOL averaged 16 days per well for all
completion operations, which is a 38% improvement compared to 2015,
and a 50% improvement compared to 2014. CONSOL realized these
improvements while utilizing 100% recycled water, which eliminates
disposal expense. Also, during the quarter, CONSOL's joint venture
partner in the Ohio Utica Shale completed 4 wells in Harrison County, Ohio.
CONSOL turned in line 35 Marcellus and Utica shale wells in the first quarter,
including the GH9 dry Utica well
in Greene County, Pennsylvania,
which was turned in line in January with a 30-day average sales
volume of 15 MMcf per day. CONSOL turned in line 17 Marcellus Shale
wells in Greene and Washington Counties. The 12-well GH46 pad
averaged 119 MMcf per day for a 30-day period, or 2.2 MMcf per day
per 1,000 lateral feet. The 5-well NV61 pad averaged 34.5 MMcf per
day for a 30-day period. Also, CONSOL's Marcellus and Utica shale joint venture partners turned in
line an additional 13 wells. Due to the company's wells continuing
to outperform, CONSOL pushed two additional Southwest Pennsylvania wells out of its 2016
turned in line (TIL) plan. As a result, CONSOL Energy estimates its
gross inventory of both drilled but uncompleted (DUC) and drilled
completed (DC) wells entering 2017 to be 79 Marcellus and
Utica shale wells, an increase
from the inventory of 77 gross wells reported at the start of
2016.
CONSOL Energy's Utica Shale development program continues to
focus in the dry gas areas. In January, CONSOL turned in line its
sixth dry Utica well, the GH9,
located in Greene County,
Pennsylvania, which has a lateral length of 6,141 feet and
was completed with 30 frac stages. Although still early, results
from the GH9 are positive, while the Gaut 4I well, located in
Westmoreland County, Pennsylvania,
continues to outperform expectations and may warrant an increase in
EUR in the near future. The Gaut 4I has cumulative production of
2.79 Bcf through the end of the first quarter at a casing pressure
of 6,758 psi. CONSOL continues to evaluate the managed pressure
drawdown methodology in the Pennsylvania dry Utica. CONSOL's Switz 6 pad located in
Monroe County, OH, has produced
5.69 Bcf through the end of the quarter from the four Utica wells, with the best performing well
accounting for 1.77 Bcf of the production. Also, the non-operated
Moundsville 6H, located in
Marshall County, West Virginia,
has produced 2.51 Bcf in 130 days, with a 24-hour initial
production (IP) rate of 39.1 MMcf per day at 7,126 psi casing
pressure. This well has a completed lateral length of 9,394 feet
with 300 foot stage spacing.
E&P Division capital expenditures declined further in the
first quarter to $62.9 million,
compared to the fourth quarter of 2015, due to efficiency
improvements and reduced activity.
E&P DIVISION
RESULTS — Quarter-to-Quarter Comparison
|
|
|
|
|
|
|
|
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
|
Ended
|
|
Ended
|
|
Ended
|
|
|
March 31,
2016
|
|
March 31,
2015
|
|
December 31,
2015
|
Sales -
Gas
|
|
$
|
157.4
|
|
|
$
|
196.5
|
|
|
$
|
152.9
|
|
Gain on Commodity
Derivative Instruments - Cash Settlement
|
|
84.3
|
|
|
30.1
|
|
|
79.5
|
|
Sales -
Oil
|
|
0.5
|
|
|
1.1
|
|
|
0.6
|
|
Sales -
NGLs
|
|
19.9
|
|
|
22.2
|
|
|
23.2
|
|
Sales -
Condensate
|
|
3.9
|
|
|
5.2
|
|
|
8.9
|
|
Total Sales Revenue
($ MM)
|
|
$
|
266.0
|
|
|
$
|
255.1
|
|
|
$
|
265.1
|
|
|
|
|
|
|
|
|
Net (Loss) Income
Attributable to CONSOL Energy Shareholders
|
|
$
|
(14.2)
|
|
|
$
|
30.9
|
|
|
$
|
57.1
|
|
Net Cash Provided by
Operating Activities ($ MM)
|
|
$
|
58.6
|
|
|
$
|
177.8
|
|
|
$
|
95.2
|
|
Total Period
Production (Bcfe)
|
|
97.5
|
|
|
71.6
|
|
|
95.5
|
|
Average Daily
Production (MMcfe)
|
|
1,071.0
|
|
|
795.7
|
|
|
1,037.8
|
|
Capital Expenditures
($ MM)
|
|
$
|
62.9
|
|
|
$
|
250.3
|
|
|
$
|
83.4
|
|
CONSOL's E&P Division production in the quarter came from
the following categories:
|
|
Quarter
|
|
Quarter
|
|
|
|
Quarter
|
|
|
|
|
Ended
|
|
Ended
|
|
|
|
Ended
|
|
|
|
|
March 31,
2016
|
|
March 31,
2015
|
|
%
Increase/
(Decrease)
|
|
December 31,
2015
|
|
%
Increase/(Decrease)
|
GAS
|
|
|
|
|
|
|
|
|
|
|
Marcellus Sales
Volumes (Bcf)
|
|
45.1
|
|
|
32.1
|
|
|
40.5
|
%
|
|
43.7
|
|
|
3.2
|
%
|
Utica Sales Volumes
(Bcf)
|
|
17.7
|
|
|
6.2
|
|
|
185.5
|
%
|
|
14.8
|
|
|
19.6
|
%
|
CBM Sales Volumes
(Bcf)
|
|
17.6
|
|
|
18.9
|
|
|
(6.9)
|
%
|
|
18.7
|
|
|
(5.9)
|
%
|
Other Sales Volumes
(Bcf)1
|
|
5.7
|
|
|
6.3
|
|
|
(9.5)
|
%
|
|
6.3
|
|
|
(9.5)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
LIQUIDS2
|
|
|
|
|
|
|
|
|
|
|
NGLs Sales Volumes
(Bcfe)
|
|
9.7
|
|
|
6.5
|
|
|
49.2
|
%
|
|
9.8
|
|
|
(1.0)
|
%
|
Oil Sales Volumes
(Bcfe)
|
|
0.1
|
|
|
0.1
|
|
|
—
|
%
|
|
0.1
|
|
|
—
|
%
|
Condensate Sales
Volumes (Bcfe)
|
|
1.6
|
|
|
1.5
|
|
|
6.7
|
%
|
|
2.1
|
|
|
(23.8)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
|
|
97.5
|
|
|
71.6
|
|
|
36.2
|
%
|
|
95.5
|
|
|
2.1
|
%
|
Note: The increase in Marcellus sales volumes represents only
the gas portion of production. When including liquids, the increase
in Marcellus volumes was 39% compared to the year-earlier quarter.
Production results are net of royalties.
1. Other Sales
Volumes: primarily related to shallow oil and gas
production.
2. Liquids: NGLs, Oil, and Condensate are
converted to Mcfe at the rate of one barrel equals six Mcf based
upon the approximate relative energy content of oil and natural
gas.
Liquids production of 11.4 Bcfe, as a percentage of the total of
97.5 Bcfe, was approximately 12% in the just-ended quarter. As a
result of continuing to high-grade production away from wet areas
and shift more towards dry gas areas, liquids production decreased
by 0.6 Bcfe, or approximately 5% during the quarter, compared to
the fourth quarter of 2015.
E&P PRICE AND
COST DATA PER MCFE — Quarter-to-Quarter Comparison:
|
|
|
|
|
|
|
|
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
|
Ended
|
|
Ended
|
|
Ended
|
(Per Mcfe)
|
|
March 31,
2016
|
|
March 31,
2015
|
|
December 31,
2015
|
Average Sales Price -
Gas
|
|
$
|
1.83
|
|
|
$
|
3.10
|
|
|
$
|
1.83
|
|
Average Gain on
Commodity Derivative Instruments - Cash Settlement- Gas
|
|
$
|
0.98
|
|
|
$
|
0.48
|
|
|
$
|
0.95
|
|
Average Sales Price -
Oil*
|
|
$
|
5.14
|
|
|
$
|
7.97
|
|
|
$
|
6.51
|
|
Average Sales Price -
NGLs*
|
|
$
|
2.05
|
|
|
$
|
3.40
|
|
|
$
|
2.36
|
|
Average Sales Price -
Condensate*
|
|
$
|
2.44
|
|
|
$
|
3.47
|
|
|
$
|
4.23
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Sales Price -
Total Company
|
|
$
|
2.73
|
|
|
$
|
3.56
|
|
|
$
|
2.78
|
|
Costs -
Production
|
|
|
|
|
|
|
Lifting
|
|
$
|
0.28
|
|
|
$
|
0.52
|
|
|
$
|
0.27
|
|
Ad Valorem, Severance
and Other Taxes
|
|
0.09
|
|
|
0.13
|
|
|
0.06
|
|
DD&A
|
|
1.00
|
|
|
1.09
|
|
|
0.97
|
|
Total Production
Costs
|
|
$
|
1.37
|
|
|
$
|
1.74
|
|
|
$
|
1.30
|
|
Costs -
Gathering
|
|
|
|
|
|
|
Transportation
|
|
$
|
0.79
|
|
|
$
|
0.75
|
|
|
$
|
0.79
|
|
Operating
Costs
|
|
0.17
|
|
|
0.30
|
|
|
0.20
|
|
DD&A
|
|
0.08
|
|
|
0.12
|
|
|
0.08
|
|
Total Gathering
Costs
|
|
$
|
1.04
|
|
|
$
|
1.17
|
|
|
$
|
1.07
|
|
|
|
|
|
|
|
|
Total
Costs
|
|
$
|
2.41
|
|
|
$
|
2.91
|
|
|
$
|
2.37
|
|
|
|
|
|
|
|
|
Margin
|
|
$
|
0.32
|
|
|
$
|
0.65
|
|
|
$
|
0.41
|
|
*Oil, NGLs, and Condensate are converted to Mcfe at the rate
of one barrel equals six Mcf based upon the approximate relative
energy content of oil and natural gas, which is not indicative of
the relationship of oil, NGLs, condensate, and natural gas
prices.
Note: "Total Costs" excludes selling, general
administration, incentive compensation, and other corporate
expenses.
The average sales price per Mcfe within the E&P Division was
impaired in the just-ended quarter, when compared to the
year-earlier quarter due to depressed commodity prices.
The average sales price of $2.73
per Mcfe, when combined with unit costs of $2.41 per Mcfe, resulted in a margin of
$0.32 per Mcfe. This was a decrease
when compared to the year-earlier quarter, with the improvements in
unit costs partially offsetting the decline in price
realizations.
Total E&P Division unit costs continued to improve in the
just-ended quarter, compared to the year-earlier quarter, as fixed
costs were spread over higher production volumes. Also, low-cost
Marcellus and Utica Shale production represented a much higher
proportion of total production, which benefited unit costs.
E&P Marketing, Transportation, and Processing
Update:
For the first quarter of 2016, CONSOL's average sales price for
natural gas, natural gas liquids (NGL), oil, and condensate was
$2.73 per Mcfe. CONSOL's average
price for natural gas was $1.83 per
Mcf for the quarter and, including cash settlements from hedging,
was $2.81 per Mcf. During the first
quarter, CONSOL produced NGL, oil, and condensate volumes of 11.4
Bcfe, or 12% of the company's total gas equivalent volumes. These
liquids volumes were 40% greater than those of the year-earlier
quarter, which then comprised 11% of the company's total gas
equivalent volumes. The average realized price for all liquids for
the first quarter of 2016 was $12.78
per barrel.
The company currently has a total of 1.2 Bcf per day of
available firm transportation capacity. This is composed of 0.9 Bcf
per day of firm capacity on existing pipelines and an additional
0.3 Bcf per day of long-term firm sales with major customers having
their own firm capacity. Additionally, CONSOL has contracted
volumes of approximately 0.5 Bcf per day on several pipeline
projects that will be completed over the next several years. Even
with the future expiration of certain transportation contracts, the
company's effective firm transportation capacity will increase to
approximately 1.5 Bcf per day. The average demand cost for the
existing firm capacity is approximately $0.24 per MMBtu. The average demand cost for the
existing and committed firm capacity is approximately $0.33 per MMBtu.
In addition to firm transportation capacity, CONSOL has
developed a processing portfolio to support the projected volumes
from its wet production areas. The company has agreements in place
to support the processing of approximately 0.5 Bcf per day of gross
natural gas volumes.
In April, CONSOL began recovering and selling ethane primarily
via Sunoco Logistics' Mariner East project, which ships ethane to
the Marcus Hook Industrial Complex for export. Such ethane sales
are expected to improve NGL netbacks in the second quarter. On an
equivalent basis, these ethane sales currently yield a price in
excess of the Texas Eastern M2 market where sales would generally
have occurred had the volumes been rejected into the natural gas
stream. CONSOL expects further revenue enhancement in 2016 and
beyond as its recovered ethane volumes grow and as the Mariner East
project expands in 2017.
Coal Division Results:
Coal Division First Quarter Summary:
During the first quarter of 2016, the Pennsylvania Operations
total unit costs were $33.16 per ton,
compared to $42.62 per ton in the
year-earlier quarter, despite sales tons declining by approximately
18% over the same period.
As reported by CNX Coal Resources LP (CNXC) in their first
quarter 2016 earnings press release, dated April 25, 2016, "In January 2016, we returned to running our mines on
a more consistent schedule to achieve productivity improvements,
despite running the risk of potentially selling some lower-priced
tons in the export markets. Our strategy worked as expected,
leading to improved mine consistency and better margins as the
quarter advanced, with exports being able to absorb surplus mine
production. During the first quarter of 2016, CNXC also made
several operational adjustments including idling one longwall,
reducing staffing levels and realigning employee benefits. All of
these steps resulted in a more consistent operating schedule at the
mines, reduced labor costs and improved productivity. Productivity
for the first quarter, as measured by tons per employee-hour,
improved by 14% compared to the year-ago period, despite the
reduced number of longwalls in operation. Looking forward, CNXC
expects a slight improvement in coal shipments in the second
quarter coupled with a slight increase in cost of coal sold,
compared to the first quarter, due to four expected longwall
moves."
During the quarter, CONSOL's active coal operations generated
$89 million of cash from continuing
operations before capital expenditures.
COAL DIVISION
RESULTS BY PRODUCT CATEGORY - Quarter-To-Quarter
Comparison
|
|
|
|
|
|
|
|
|
|
|
|
PA
Ops
|
|
PA
Ops
|
|
Other
|
|
Other
|
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
|
Ended
|
|
Ended
|
|
Ended
|
|
Ended
|
|
|
March
31,
|
|
March
31,
|
|
March
31,
|
|
March
31,
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
|
|
Beginning Inventory
(millions of tons)
|
|
0.1
|
|
|
0.2
|
|
|
0.3
|
|
|
0.1
|
|
Coal Production
(millions of tons)
|
|
5.4
|
|
|
6.5
|
|
|
0.3
|
|
|
0.6
|
|
Ending Inventory
(millions of tons)
|
|
0.3
|
|
|
0.2
|
|
|
—
|
|
|
0.1
|
|
Sales - Company
Produced (millions of tons)
|
|
5.3
|
|
|
6.5
|
|
|
0.4
|
|
|
0.5
|
|
|
|
|
|
|
|
|
|
|
Sales Per
Ton
|
|
$
|
42.99
|
|
|
$
|
58.82
|
|
|
$
|
54.81
|
|
|
$
|
61.54
|
|
|
|
|
|
|
|
|
|
|
Total Production
Costs Per Ton
|
|
$
|
33.16
|
|
|
$
|
42.62
|
|
|
$
|
51.58
|
|
|
$
|
54.05
|
|
|
|
|
|
|
|
|
|
|
Average Margin Per
Ton Sold
|
|
$
|
9.83
|
|
|
$
|
16.20
|
|
|
$
|
3.23
|
|
|
$
|
7.49
|
|
Addback: DD&A Per
Ton
|
|
$
|
6.45
|
|
|
$
|
6.66
|
|
|
$
|
3.03
|
|
|
$
|
3.32
|
|
Average Margin Per
Ton, before DD&A
|
|
$
|
16.28
|
|
|
$
|
22.86
|
|
|
$
|
6.26
|
|
|
$
|
10.81
|
|
Cash Flow before Cap.
Ex ($ MM)
|
|
$
|
86
|
|
|
$
|
149
|
|
|
$
|
3
|
|
|
$
|
5
|
|
The Pennsylvania Operations include Bailey, Enlow Fork, and
Harvey mines. Other includes the Miller Creek Complex. Total
Production Costs per Ton include: operating costs, royalty and
production taxes and depreciation, depletion and amortization.
Sales tons times Average Margin Per Ton, before DD&A is meant
to approximate the amount of cash generated for the Pennsylvanian
Operations and Other coal categories. This cash generation will be
offset by maintenance of production (MOP) capital expenditures.
Table may not sum due to rounding.
E&P Division Guidance:
CONSOL Energy continues to expect annual 2016 E&P Division
production to grow by approximately 15%, compared to 2015 total
production volumes.
Total hedged natural gas production in the 2016 second quarter
is 70.7 Bcf. The annual gas hedge position is shown in the table
below:
E&P DIVISION
GUIDANCE
|
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
2017
|
Total Yearly
Production (Bcfe) / % growth
|
|
~15%
|
|
|
TBD*
|
|
Volumes Hedged (Bcf),
as of 4/14/16
|
|
262.6
|
|
|
210.8
|
|
|
|
|
|
|
|
|
* Yearly 2017 production will be a function of the second
half of 2016 capital program, continued debottlenecking
initiatives, and the company's drilled but uncompleted (DUC) well
inventory.
CONSOL Energy's hedged gas volumes include a combination of
NYMEX financial hedges and index financial hedges (NYMEX plus
basis). In addition, to protect the NYMEX hedge volumes from basis
exposure, CONSOL enters into basis-only financial hedges and
physical sales with fixed basis at certain sales points. CONSOL
Energy's gas hedge position is shown in the table below:
GAS
HEDGES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q2
2016
|
|
2016
|
|
2017
|
Total NYMEX +
Basis* (Bcf)
|
|
67.3
|
|
|
259.7
|
|
|
122.5
|
|
Average Hedge Price
($/Mcf)
|
|
$
|
2.87
|
|
|
$
|
3.07
|
|
|
$
|
2.67
|
|
|
|
|
|
|
|
|
NYMEX Only Hedges
Exposed to Basis (Bcf)
|
|
-
|
|
|
-
|
|
|
88.3
|
|
Average Hedge
Price ($/Mcf)
|
|
-
|
|
|
-
|
|
|
$
|
2.98
|
|
|
|
|
|
|
|
|
Physical Sales With
Fixed Basis Exposed to NYMEX (Bcf)
|
|
3.4
|
|
|
2.9
|
|
|
-
|
|
Average Hedge Basis
Value ($/Mcf)
|
|
$
|
(0.20)
|
|
|
$
|
(0.04)
|
|
|
-
|
|
* Includes physical sales with fixed basis in Q2 2016, 2016,
and 2017 of 16.1 Bcf, 74.5 Bcf, and 24.1 Bcf, respectively.
During the first quarter of 2016, CONSOL Energy added additional
NYMEX natural gas hedges of 22.3 Bcf for 2016 and 54.8 Bcf for
2017. In addition, to help mitigate basis exposure on NYMEX hedges,
in the first quarter, CONSOL added 25.1 Bcf and 42.5 Bcf of basis
hedges for 2016 and 2017, respectively.
CONSOL's 2016 NYMEX plus basis natural gas hedge position has
increased to 259.7 Bcf at an average hedge price of $3.07 per Mcf. NYMEX plus basis hedge volumes are
not exposed to basis differentials but instead have protected
revenue. As a result, in 2016, NYMEX plus basis gas hedges should
lock in revenue of approximately $797
million.
As previously stated on last quarter's earnings call, in
accordance with the company's hedging program, CONSOL added longer
duration hedges, which were layered in over time. The
company's confidence in maintaining, or even further improving, its
already low-cost structure, has enabled CONSOL to layer on these
additional hedges, which will help provide downside protection.
During the first quarter of 2016, CONSOL Energy continued to
evolve its hedging program and added NGL (propane) hedges, along
with direct sales contracts to other counterparties. CONSOL
currently has 7.5 million gallons of propane directly hedged from
April of 2016 through March of 2017 at an average price of
$0.43 per gallon.
Coal Division Guidance:
As stated in CONSOL Energy's press release on April 7, 2016, as part of the corporate
reorganization resulting from the sale of the Buchanan
Mine, CNX Coal Resources LP, which operates
the Pennsylvania mining complex, will manage all human
resources, land, marketing and external communications matters
related to CONSOL's Pennsylvania Operations. As such, CONSOL Energy
will adopt and expand upon CNX Coal Resources 2016 Adjusted EBITDA
guidance that they provide in their press release through now
providing guidance for CONSOL's pro rata total Coal Division 2016
Adjusted EBITDA.
COAL DIVISION
GUIDANCE
|
|
|
2016
|
CNX Coal Resources LP
("CNXC") Adjusted EBITDA (20% undivided interest
of PA Operations)
|
|
$
|
59
|
|
-
|
$
|
69
|
|
x5 (@ 100%
interest)
|
|
$
|
295
|
|
-
|
$
|
345
|
|
Less:
Noncontrolling Interest
|
|
(26)
|
|
-
|
(31)
|
|
Plus: CONSOL's
Other Coal Division EBITDA1
|
|
22
|
|
-
|
27
|
|
Plus: CONSOL's
Other Miscellaneous Coal EBITDA2
|
|
15
|
|
-
|
20
|
|
Less: CONSOL's
Other Coal Division Costs and Expenses (including Legacy
Liabilities' Costs)3
|
|
(126)
|
|
-
|
(131)
|
|
CONSOL Energy's Pro Rata
Coal Division Adjusted EBITDA
|
|
$
|
180
|
|
-
|
$
|
230
|
|
Note: CONSOL Energy is unable to provide a
reconciliation of projected CNXC Adjusted EBITDA, CONSOL's Other
Coal Division EBITDA, and CONSOL's Other Miscellaneous Coal EBITDA
to projected operating income, the most comparable financial
measure calculated in accordance with GAAP, due to the unknown
effect, timing and potential significance of certain income
statement items.
(1) Includes fiscal year 2016 for Miller Creek and Other Coal Operations and 1Q16
for Buchanan, and excludes Loss on Sale of Buchanan.
(2) Includes miscellaneous other income (net of
applicable expenses) associated with the company's Terminal
Operations, Rental Income, Coal Royalty Income, and other
miscellaneous land income.
(3) Includes Legacy Liability Costs of approximately
$90-95 million; Other Coal-Related
Corporate Expenses (STIC, stock-based compensation), and other
miscellaneous items (coal reserve holding costs).
CONSOL Energy's Pro Rata Coal Division Adjusted EBITDA for 2016
is net of all legacy liabilities associated with the Coal Division,
which are comprised of the following: long-term disability (LTD),
workers compensation (WC), Coal Workers' Pneumoconiosis (CWP),
Other Post-Employment Benefits (OPEB-retiree medical), salary
retirement/pension, and asset retirement obligations (ARO).
Excluding the discontinued Virginia Operation's (the Buchanan
Mine) 1.1 million tons sold in the first quarter, CONSOL Energy now
expects annual 2016 consolidated total Coal Division sales to be
approximately 23.9-27.4 million tons, which includes 2016 estimated
consolidated total sales for Pennsylvania Operations of 22.5-25.5
million tons.
CONSOL Energy expects 2016 total consolidated Coal Division
capital expenditures to now be between $105-$125 million, which includes Pennsylvania
Operations capital expenditures of $90-$100
million. The Coal Division's reduction in capital
expenditures were driven primarily from the deferral of spending
associated with the coal refuse disposal area for one year, due to
existing capacity and timing needed for construction. On a
normalized basis, the Coal Division expects maintenance of
production capital of $5-$6 per
ton.
Liquidity:
As of March 31, 2016, CONSOL
Energy had $1,279.7 million in total
liquidity, which is comprised of $417.6
million of cash, excluding the CNXC cash balance, and
$862.1 million available to be
borrowed under its $2.0 billion bank
facility. During the quarter, CONSOL's liquidity improved
$423.8 million due to the sale of the
Buchanan Mine and related metallurgical coal assets plus
$49.2 million of cash generated from
operations offset by an increase of $28.2
million in outstanding letters of credit. In addition,
CONSOL holds 12.7 million CNXC limited partnership units with a
current market value of approximately $101
million and 19.1 million CONE Midstream Partners LP ("CNNX")
limited partnership units with a current market value of
approximately $266 million, as of
April 19, 2016.
CONSOL Energy used the sale proceeds and the cash generated from
operations during the quarter to reduce outstanding debt, less cash
and cash equivalents, by $445.2
million.
About CONSOL
CONSOL Energy Inc. (NYSE: CNX) is a Pittsburgh-based
energy producer, and one of the largest independent natural gas
exploration, development and production companies, with operations
centered in the major shale formations of the Appalachian basin.
The company deploys an organic growth strategy focused on
developing its substantial resource base. As of December 31,
2015, CONSOL Energy had 5.6 trillion cubic feet
equivalent of proved natural gas reserves. CONSOL
Energy is a member of the Standard & Poor's Midcap 400
Index. Additional information may be found at
www.consolenergy.com.
Non-GAAP Financial Measures
Definition: EBIT is defined as earnings before deducting
net interest expense (interest expense less interest income) and
income taxes. EBITDA is defined as earnings before deducting
net interest expense (interest expense less interest income),
income taxes and depreciation, depletion and amortization.
Adjusted EBITDA is defined as EBITDA after adjusting for the
discrete items listed below. Although EBIT, EBITDA, and Adjusted
EBITDA are not measures of performance calculated in accordance
with generally accepted accounting principles, management believes
that they are useful to an investor in evaluating CONSOL Energy
because they are widely used to evaluate a company's operating
performance. Investors should not view these metrics as a
substitute for measures of performance that are calculated in
accordance with generally accepted accounting principles. In
addition, because all companies do not calculate EBIT, EBITDA, or
Adjusted EBITDA identically, the presentation here may not be
comparable to similarly titled measures of other companies.
Reconciliation of EBIT, EBITDA and Adjusted EBITDA to financial
net income attributable to CONSOL Energy Shareholders is as follows
(dollars in 000):
|
|
Three Months
Ended
|
|
|
March
31,
|
|
|
2016
|
|
2016
|
|
2016
|
|
2016
|
|
2015
|
Dollars in
thousands
|
|
E&P
Division
|
|
COAL
Division
|
|
Other1
|
|
Total
Company
|
|
Total
Company
|
Net (Loss)
Income
|
|
$
|
(23,541)
|
|
|
$
|
(49,015)
|
|
|
$
|
(23,902)
|
|
|
$
|
(96,458)
|
|
|
$
|
79,030
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Loss (Income)
from Discontinued Operations
|
|
—
|
|
|
46,172
|
|
|
—
|
|
|
46,172
|
|
|
(244,317)
|
|
Add: Interest
Expense
|
|
653
|
|
|
1,733
|
|
|
47,480
|
|
|
49,866
|
|
|
55,122
|
|
Less: Interest
Income
|
|
—
|
|
|
—
|
|
|
(214)
|
|
|
(214)
|
|
|
(1,143)
|
|
Add: Income
Taxes
|
|
—
|
|
|
—
|
|
|
(26,847)
|
|
|
(26,847)
|
|
|
195,898
|
|
Earnings Before
Interest & Taxes (EBIT)
|
|
(22,888)
|
|
|
(1,110)
|
|
|
(3,483)
|
|
|
(27,481)
|
|
|
84,590
|
|
|
|
|
|
|
|
|
|
|
|
|
Add:
Depreciation, Depletion & Amortization
|
|
105,715
|
|
|
54,352
|
|
|
—
|
|
|
160,067
|
|
|
149,709
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings Before
Interest, Taxes and DD&A (EBITDA) from Continuing
Operations
|
|
$
|
82,827
|
|
|
$
|
53,242
|
|
|
$
|
(3,483)
|
|
|
$
|
132,586
|
|
|
$
|
234,299
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
Unrealized Loss(Gain)
on Commodity Derivative Instruments
|
|
29,271
|
|
|
—
|
|
|
—
|
|
|
29,271
|
|
|
(60,004)
|
|
Loss on Sale of
Gathering Pipeline
|
|
12,636
|
|
|
—
|
|
|
—
|
|
|
12,636
|
|
|
—
|
|
Severance
Expense
|
|
—
|
|
|
2,251
|
|
|
667
|
|
|
2,918
|
|
|
—
|
|
Loss on Debt
Extinguishment
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
67,734
|
|
Total Pre-tax
Adjustments
|
|
41,907
|
|
|
2,251
|
|
|
667
|
|
|
44,825
|
|
|
7,730
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
|
$
|
124,734
|
|
|
$
|
55,493
|
|
|
$
|
(2,816)
|
|
|
$
|
177,411
|
|
|
$
|
242,029
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Noncontrolling
Interest
|
|
—
|
|
|
(1,114)
|
|
|
—
|
|
|
(1,114)
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
Attributable to Continuing Operations
|
|
$
|
124,734
|
|
|
$
|
54,379
|
|
|
$
|
(2,816)
|
|
|
$
|
176,297
|
|
|
$
|
242,029
|
|
Note: Income tax effect of Total Pre-tax Adjustments was
$10,310 and $1,778 for the three months ended March 31, 2016 and March
31, 2015, respectively. Adjusted net income attributable to
CONSOL Energy shareholders for the three months ended March 31, 2016 is calculated as GAAP net loss
from continuing operations of $50,286
plus total pre-tax adjustments of $44,825, less the tax benefit of $10,310, equals the adjusted net loss from
continuing operations of $15,771.
(1) CONSOL Energy's
Other Division includes expenses from various other corporate
activities including income tax expense that are not allocated to
E&P or Coal Divisions.
Free cash flow and organic free cash flow from continuing
operations are non-GAAP financial measures. Management believes
that these measures are meaningful to investors because management
reviews cash flows generated from operations and non-core asset
sales after taking into consideration capital expenditures due to
the fact that these expenditures are considered necessary to
maintain and expand CONSOL's asset base and are expected to
generate future cash flows from operations. It is important to note
that free cash flow and organic free cash flow from continuing
operations do not represent the residual cash flow available for
discretionary expenditures since other non-discretionary
expenditures, such as mandatory debt service requirements, are not
deducted from the measure.
Organic Cash
Flow From Continuing Operations
|
Three Months
Ended
March 31,
2016
|
Net Cash Provided by
Continuing Operations
|
$
|
119,808
|
|
|
|
Capital
Expenditures
|
(78,968)
|
|
Net Investment in
Equity Affiliates
|
(5,578)
|
|
Organic Free Cash
Flow from Continuing Operations
|
$
|
35,262
|
|
Free Cash
Flow
|
Three Months
Ended
March 31,
2016
|
Net Cash Provided by
Operating Activities
|
$
|
128,442
|
|
|
|
Capital
Expenditures
|
(78,968)
|
|
Capital Expenditures
of Discontinued Operations
|
(5,737)
|
|
Net Investment in
Equity Affiliates
|
(5,578)
|
|
Proceeds From Sales
of Assets
|
8,453
|
|
Proceeds From Sale of
Buchanan Mine
|
402,806
|
|
Free Cash
Flow
|
$
|
449,418
|
|
Cautionary Statements
Various statements in this release, including those that express
a belief, expectation or intention, may be considered
forward-looking statements under federal securities laws including
Section 21E of the Securities Exchange Act of 1934 (the "Exchange
Act") that involve risks and uncertainties that could cause actual
results to differ materially from projected results. Accordingly,
investors should not place undue reliance on forward-looking
statements as a prediction of actual results. The forward-looking
statements may include projections and estimates concerning the
timing and success of specific projects and our future production,
revenues, income and capital spending. When we use the words
"believe," "intend," "expect," "may," "should," "anticipate,"
"could," "estimate," "plan," "predict," "project," "will," or their
negatives, or other similar expressions, the statements which
include those words are usually forward-looking statements. When we
describe strategy that involves risks or uncertainties, we are
making forward-looking statements. The forward-looking statements
in this press release, if any, speak only as of the date of this
press release; we disclaim any obligation to update these
statements. We have based these forward-looking statements on our
current expectations and assumptions about future events. While our
management considers these expectations and assumptions to be
reasonable, they are inherently subject to significant business,
economic, competitive, regulatory and other risks, contingencies
and uncertainties, most of which are difficult to predict and many
of which are beyond our control. These risks, contingencies and
uncertainties relate to, among other matters, the following:
deterioration in economic conditions in any of the industries in
which our customers operate may decrease demand for our products,
impair our ability to collect customer receivables and impair our
ability to access capital; prices for natural gas, natural gas and
other liquids and coal are volatile and can fluctuate widely based
upon a number of factors beyond our control including oversupply
relative to the demand available for our products, weather and the
price and availability of alternative fuels; an extended decline in
the prices we receive for our natural gas, natural gas liquids and
coal affecting our operating results and cash flows; foreign
currency fluctuations could adversely affect the competitiveness of
our coal abroad; our customers extending existing contracts or
entering into new long-term contracts for coal on favorable terms;
our reliance on major customers; our inability to collect payments
from customers if their creditworthiness declines or if they fail
to honor their contracts; the disruption of rail, barge, gathering,
processing and transportation facilities and other systems that
deliver our natural gas, natural gas liquids and coal to market; a
loss of our competitive position because of the competitive nature
of the natural gas and coal industries, or a loss of our
competitive position because of overcapacity in these industries
impairing our profitability; coal users switching to other fuels in
order to comply with various environmental standards related to
coal combustion emissions; the impact of potential, as well as any
adopted environmental regulations including any relating to
greenhouse gas emissions on our operating costs as well as on the
market for natural gas and coal and for our securities; the risks
inherent in natural gas and coal operations, including our reliance
upon third party contractors, being subject to unexpected
disruptions, including geological conditions, equipment failure,
timing of completion of significant construction or repair of
equipment, fires, explosions, accidents and weather conditions
which could impact financial results; decreases in the availability
of, or increases in, the price of commodities or capital equipment
used in our mining and transportation operations; obtaining and
renewing governmental permits and approvals for our natural gas and
coal operations; the effects of government regulation on the
discharge into the water or air, and the disposal and clean-up of,
hazardous substances and wastes generated during our natural gas
and coal operations; our ability to find adequate water sources for
our use in gas drilling, or our ability to dispose of water used or
removed from strata in connection with our gas operations at a
reasonable cost and within applicable environmental rules; the
effects of stringent federal and state employee health and safety
regulations, including the ability of regulators to shut down our
operations; the potential for liabilities arising from
environmental contamination or alleged environmental contamination
in connection with our past or current gas and coal operations; the
effects of mine closing, reclamation, gas well closing and certain
other liabilities; uncertainties in estimating our economically
recoverable gas, oil and coal reserves; defects may exist in our
chain of title and we may incur additional costs associated with
perfecting title for gas rights on some of our properties or
failing to acquire these additional rights may result in a
reduction of our estimated reserves; the outcomes of various legal
proceedings, which are more fully described in our reports filed
under the Securities Exchange Act of 1934; exposure to
employee-related long-term liabilities; lump sum payments made to
retiring salaried employees pursuant to our defined benefit pension
plan exceeding total service and interest cost in a plan year;
divestitures we anticipate may not occur or produce anticipated
benefits; the terms of our existing joint ventures restrict our
flexibility, actions taken by the other party in our gas joint
ventures may impact our financial position and various
circumstances could cause us not to realize the benefits we
anticipate receiving from these joint ventures; risks associated
with our debt; replacing our gas and oil reserves, which if not
replaced, will cause our gas and oil reserves and production to
decline; declines in our borrowing base could occur for a variety
of reasons, including lower natural gas or oil prices, declines in
natural gas and oil proved reserves, and lending regulations
requirements or regulations; our hedging activities may prevent us
from benefiting from price increases and may expose us to other
risks; changes in federal or state income tax laws, particularly in
the area of percentage depletion and intangible drilling costs,
could cause our financial position and profitability to
deteriorate; failure to appropriately allocate capital and other
resources among our strategic opportunities may adversely affect
our financial condition; failure by Murray Energy to satisfy
liabilities it acquired from us, or failure to perform its
obligations under various arrangements, which we guaranteed, could
materially or adversely affect our results of operations, financial
position, and cash flows; information theft, data corruption,
operational disruption and/or financial loss resulting from a
terrorist attack or cyber incident; operating in a single
geographic area; certain provisions in our multi-year sales
contracts may provide limited protection during adverse economic
conditions, and may result in economic penalties or permit the
customer to terminate the contract; our common units in CNX Coal
Resources LP and CONE Midstream Partners LP are subordinated, and
we may not receive distributions from CNX Coal Resources LP or CONE
Midstream Partners LP; with respect to the sale of the Buchanan and
Amonate mines and other coal assets to Coronado IV LLC - disruption
to our business, including customer, employee and supplier
relationships resulting from this transaction, and the impact of
the transaction on our future operating results; other factors
discussed in the 2015 Form 10-K under "Risk Factors," as updated by
any subsequent Form 10-Qs, which are on file at the Securities and
Exchange Commission.
The SEC permits oil and gas companies, in their filings with the
SEC, to disclose only proved, probable, and possible oil and gas
reserves that a company anticipates as of a given date to be
economically and legally producible and deliverable by application
of development projects to known accumulations. We may use certain
terms in this press release, such as EUR (estimated ultimate
recovery), unproved reserves and total resource potential, that the
SEC's rules strictly prohibit us from including in filings with the
SEC. These measures are by their nature more speculative than
estimates of reserves prepared in accordance with SEC definitions
and guidelines and accordingly are less certain. We also note that
the SEC strictly prohibits us from aggregating proved, probable and
possible reserves in filings with the SEC due to the different
levels of certainty associated with each reserve category.
CONSOL ENERGY INC.
AND SUBSIDIARIES
|
CONSOLIDATED
STATEMENTS OF INCOME
|
|
|
(Dollars in
thousands, except per share data)
|
Three Months
Ended
|
(Unaudited)
|
March
31,
|
Revenues and Other
Income:
|
2016
|
|
2015
|
Natural Gas, NGLs and
Oil Sales
|
$
|
181,255
|
|
|
$
|
224,438
|
|
Gain on Commodity
Derivative Instruments
|
55,060
|
|
|
90,145
|
|
Coal Sales
|
251,895
|
|
|
416,151
|
|
Other Outside
Sales
|
7,709
|
|
|
13,130
|
|
Purchased Gas
Sales
|
8,618
|
|
|
3,597
|
|
Freight-Outside
Coal
|
13,110
|
|
|
6,525
|
|
Miscellaneous Other
Income
|
48,132
|
|
|
36,523
|
|
(Loss) Gain on Sale
of Assets
|
(7,265)
|
|
|
2,145
|
|
Total Revenue and
Other Income
|
558,514
|
|
|
792,654
|
|
Costs and
Expenses:
|
|
|
|
Exploration and
Production Costs
|
|
|
|
Lease Operating
Expense
|
27,739
|
|
|
37,256
|
|
Transportation,
Gathering and Compression
|
93,974
|
|
|
75,521
|
|
Production, Ad
Valorem, and Other Fees
|
8,303
|
|
|
9,192
|
|
Depreciation,
Depletion and Amortization
|
105,715
|
|
|
87,444
|
|
Exploration and
Production Related Other Costs
|
2,408
|
|
|
2,040
|
|
Purchased Gas
Costs
|
7,868
|
|
|
2,957
|
|
Other Corporate
Expenses
|
27,694
|
|
|
19,096
|
|
Selling, General, and
Administrative Costs
|
17,563
|
|
|
21,824
|
|
Total Exploration
and Production Costs
|
291,264
|
|
|
255,330
|
|
Coal
Costs
|
|
|
|
Operating and Other
Costs
|
215,074
|
|
|
291,407
|
|
Depreciation,
Depletion and Amortization
|
54,352
|
|
|
62,258
|
|
Freight
Expense
|
13,110
|
|
|
6,525
|
|
Selling, General, and
Administrative Costs
|
5,650
|
|
|
7,202
|
|
Other Corporate
Expenses
|
3,143
|
|
|
6,074
|
|
Total Coal
Costs
|
291,329
|
|
|
373,466
|
|
Other
Costs
|
|
|
|
Miscellaneous
Operating Expense
|
3,188
|
|
|
10,384
|
|
Depreciation,
Depletion and Amortization
|
—
|
|
|
7
|
|
Loss on Debt
Extinguishment
|
—
|
|
|
67,734
|
|
Interest
Expense
|
49,866
|
|
|
55,122
|
|
Total Other
Costs
|
53,054
|
|
|
133,247
|
|
Total Costs And
Expenses
|
635,647
|
|
|
762,043
|
|
(Loss) Earnings
Before Income Tax
|
(77,133)
|
|
|
30,611
|
|
Income
Taxes
|
(26,847)
|
|
|
195,898
|
|
Loss From
Continuing Operations
|
(50,286)
|
|
|
(165,287)
|
|
(Loss) Income From
Discontinued Operations, net
|
(46,172)
|
|
|
244,317
|
|
Net (Loss)
Income
|
(96,458)
|
|
|
79,030
|
|
Less: Net Income
Attributable to Noncontrolling Interest
|
1,114
|
|
|
—
|
|
Net (Loss) Income
Attributable to CONSOL Energy Shareholders
|
$
|
(97,572)
|
|
|
$
|
79,030
|
|
CONSOL ENERGY INC.
AND SUBSIDIARIES
|
CONSOLIDATED
STATEMENTS OF INCOME (CONTINUED)
|
|
|
(Dollars in
thousands, except per share data)
|
Three Months
Ended
|
(Unaudited)
|
March
31,
|
Earnings Per
Share
|
2016
|
|
2015
|
Basic
|
|
|
|
Loss from Continuing
Operations
|
$
|
(0.22)
|
|
|
$
|
(0.72)
|
|
(Loss) Income from
Discontinued Operations
|
(0.21)
|
|
|
1.06
|
|
Total Basic (Loss)
Earnings Per Share
|
$
|
(0.43)
|
|
|
$
|
0.34
|
|
Dilutive
|
|
|
|
Loss from Continuing
Operations
|
$
|
(0.22)
|
|
|
$
|
(0.72)
|
|
(Loss) Income from
Discontinued Operations
|
(0.21)
|
|
|
1.06
|
|
Total Dilutive
(Loss) Earnings Per Share
|
$
|
(0.43)
|
|
|
$
|
0.34
|
|
|
|
|
|
Dividends Paid Per
Share
|
$
|
0.01
|
|
|
$
|
0.0625
|
|
CONSOL ENERGY INC.
AND SUBSIDIARIES
|
CONSOLIDATED
STATEMENTS OF COMPREHENSIVE INCOME
|
|
|
|
Three Months
Ended
|
(Dollars in
thousands)
|
March
31,
|
(Unaudited)
|
2016
|
|
2015
|
Net (Loss)
Income
|
$
|
(96,458)
|
|
|
$
|
79,030
|
|
Other Comprehensive
Loss:
|
|
|
|
Actuarially
Determined Long-Term Liability Adjustments (Net of tax: $682,
$90)
|
(2,484)
|
|
|
(149)
|
|
Reclassification of Cash Flow Hedges from OCI to Earnings (Net of
tax: $5,624, $11,213)
|
(9,814)
|
|
|
(19,314)
|
|
|
|
|
|
Other Comprehensive
Loss
|
(12,298)
|
|
|
(19,463)
|
|
|
|
|
|
Comprehensive (Loss)
Income
|
(108,756)
|
|
|
59,567
|
|
|
|
|
|
Less: Net Income
Attributable to Noncontrolling Interests
|
1,114
|
|
|
—
|
|
|
|
|
|
Comprehensive (Loss)
Income Attributable to CONSOL Energy Inc. Shareholders
|
$
|
(109,870)
|
|
|
$
|
59,567
|
|
CONSOL ENERGY INC.
AND SUBSIDIARIES
|
CONSOLIDATED
BALANCE SHEETS
|
|
|
|
|
|
(Unaudited)
|
|
|
(Dollars in
thousands)
|
March 31,
2016
|
|
December 31,
2015
|
ASSETS
|
|
|
|
Current
Assets:
|
|
|
|
Cash and Cash
Equivalents
|
$
|
426,650
|
|
|
$
|
72,578
|
|
Accounts and Notes
Receivable:
|
|
|
|
Trade
|
165,941
|
|
|
157,162
|
|
Other
Receivables
|
149,490
|
|
|
121,881
|
|
Inventories
|
77,230
|
|
|
83,674
|
|
Recoverable Income
Taxes
|
1,871
|
|
|
13,887
|
|
Prepaid
Expenses
|
282,214
|
|
|
297,421
|
|
Current Assets of
Discontinued Operations
|
43,047
|
|
|
58,160
|
|
Total Current
Assets
|
1,146,443
|
|
|
804,763
|
|
Property, Plant and
Equipment:
|
|
|
|
Property, Plant and
Equipment
|
14,639,990
|
|
|
14,595,952
|
|
Less—Accumulated
Depreciation, Depletion and Amortization
|
5,549,599
|
|
|
5,396,295
|
|
Property, Plant, and
Equipment of Discontinued Operations, Net
|
—
|
|
|
469,720
|
|
Total Property,
Plant and Equipment—Net
|
9,090,391
|
|
|
9,669,377
|
|
Other
Assets:
|
|
|
|
Investment in
Affiliates
|
251,628
|
|
|
237,330
|
|
Other
|
227,396
|
|
|
217,585
|
|
Other Assets of
Discontinued Operations
|
12
|
|
|
847
|
|
Total Other
Assets
|
479,036
|
|
|
455,762
|
|
TOTAL
ASSETS
|
$
|
10,715,870
|
|
|
$
|
10,929,902
|
|
CONSOL ENERGY INC.
AND SUBSIDIARIES
|
CONSOLIDATED
BALANCE SHEETS
|
|
|
|
|
|
(Unaudited)
|
|
|
(Dollars in
thousands, except per share data)
|
March 31,
2016
|
|
December 31,
2015
|
LIABILITIES AND
EQUITY
|
|
|
|
Current
Liabilities:
|
|
|
|
Accounts
Payable
|
$
|
221,625
|
|
|
$
|
257,288
|
|
Current Portion of
Long-Term Debt
|
5,316
|
|
|
5,855
|
|
Short-Term Notes
Payable
|
851,500
|
|
|
952,000
|
|
Other Accrued
Liabilities
|
486,906
|
|
|
440,523
|
|
Current Liabilities
of Discontinued Operations
|
19,584
|
|
|
25,272
|
|
Total Current
Liabilities
|
1,584,931
|
|
|
1,680,938
|
|
Long-Term
Debt:
|
|
|
|
Long-Term
Debt
|
2,725,471
|
|
|
2,709,444
|
|
Capital Lease
Obligations
|
33,490
|
|
|
35,008
|
|
Long-Term Debt of
Discontinued Operations
|
—
|
|
|
3,753
|
|
Total Long-Term
Debt
|
2,758,961
|
|
|
2,748,205
|
|
Deferred Credits and
Other Liabilities:
|
|
|
|
Deferred Income
Taxes
|
52,844
|
|
|
74,629
|
|
Postretirement
Benefits Other Than Pensions
|
623,525
|
|
|
630,892
|
|
Pneumoconiosis
Benefits
|
118,178
|
|
|
111,903
|
|
Mine
Closing
|
290,108
|
|
|
289,785
|
|
Gas Well
Closing
|
164,124
|
|
|
163,842
|
|
Workers'
Compensation
|
68,846
|
|
|
69,812
|
|
Salary
Retirement
|
86,369
|
|
|
91,596
|
|
Reclamation
|
34,490
|
|
|
34,150
|
|
Other
|
194,406
|
|
|
166,957
|
|
Deferred Credits and
Other Liabilities of Discontinued Operations
|
—
|
|
|
11,417
|
|
Total Deferred
Credits and Other Liabilities
|
1,632,890
|
|
|
1,644,983
|
|
TOTAL
LIABILITIES
|
5,976,782
|
|
|
6,074,126
|
|
Stockholders'
Equity:
|
|
|
|
Common Stock, $.01
Par Value; 500,000,000 Shares Authorized, 229,363,247 Issued and
Outstanding at March 31, 2016; 229,054,236 Issued and Outstanding
at December 31, 2015
|
2,297
|
|
|
2,294
|
|
Capital in Excess of
Par Value
|
2,436,436
|
|
|
2,435,497
|
|
Preferred Stock,
15,000,000 shares authorized, None issued and
outstanding
|
—
|
|
|
—
|
|
Retained
Earnings
|
2,478,493
|
|
|
2,579,834
|
|
Accumulated Other
Comprehensive Loss
|
(327,896)
|
|
|
(315,598)
|
|
Total CONSOL
Energy Inc. Stockholders' Equity
|
4,589,330
|
|
|
4,702,027
|
|
Noncontrolling
Interest
|
149,758
|
|
|
153,749
|
|
TOTAL
EQUITY
|
4,739,088
|
|
|
4,855,776
|
|
TOTAL LIABILITIES
AND EQUITY
|
$
|
10,715,870
|
|
|
$
|
10,929,902
|
|
CONSOL ENERGY INC.
AND SUBSIDIARIES
|
CONSOLIDATED
STATEMENTS OF STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in
thousands, except per share data)
|
Common
Stock
|
|
Capital in
Excess
of Par
Value
|
|
Retained
Earnings
(Deficit)
|
|
Accumulated
Other
Comprehensive
Loss
|
|
Total CONSOL
Energy Inc.
Stockholders'
Equity
|
|
Non-
Controlling
Interest
|
|
Total
Equity
|
December 31,
2015
|
$
|
2,294
|
|
|
$
|
2,435,497
|
|
|
$
|
2,579,834
|
|
|
$
|
(315,598)
|
|
|
$
|
4,702,027
|
|
|
$
|
153,749
|
|
|
$
|
4,855,776
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (Loss)
Income
|
—
|
|
|
—
|
|
|
(97,572)
|
|
|
—
|
|
|
(97,572)
|
|
|
1,114
|
|
|
(96,458)
|
|
Other Comprehensive
Loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(12,298)
|
|
|
(12,298)
|
|
|
—
|
|
|
(12,298)
|
|
Comprehensive (Loss)
Income
|
—
|
|
|
—
|
|
|
(97,572)
|
|
|
(12,298)
|
|
|
(109,870)
|
|
|
1,114
|
|
|
(108,756)
|
|
Issuance of Common
Stock
|
3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
3
|
|
Treasury Stock
Activity
|
—
|
|
|
—
|
|
|
(1,475)
|
|
|
—
|
|
|
(1,475)
|
|
|
—
|
|
|
(1,475)
|
|
Tax Cost From
Stock-Based Compensation
|
—
|
|
|
(4,377)
|
|
|
—
|
|
|
—
|
|
|
(4,377)
|
|
|
—
|
|
|
(4,377)
|
|
Amortization of
Stock-Based Compensation Awards
|
—
|
|
|
5,316
|
|
|
—
|
|
|
—
|
|
|
5,316
|
|
|
308
|
|
|
5,624
|
|
Distributions to
Noncontrolling Interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,413)
|
|
|
(5,413)
|
|
Dividends ($0.01 per
share)
|
—
|
|
|
—
|
|
|
(2,294)
|
|
|
—
|
|
|
(2,294)
|
|
|
—
|
|
|
(2,294)
|
|
Balance at March
31, 2016
|
$
|
2,297
|
|
|
$
|
2,436,436
|
|
|
$
|
2,478,493
|
|
|
$
|
(327,896)
|
|
|
$
|
4,589,330
|
|
|
$
|
149,758
|
|
|
$
|
4,739,088
|
|
CONSOL ENERGY INC.
AND SUBSIDIARIES
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
|
|
(Dollars in
thousands)
|
Three Months
Ended
|
(Unaudited)
|
March
31,
|
Operating
Activities:
|
2016
|
|
2015
|
Net (Loss)
Income
|
$
|
(96,458)
|
|
|
$
|
79,030
|
|
Adjustments to
Reconcile Net Loss to Net Cash Provided By Operating
Activities:
|
|
|
|
Net Loss (Income)
from Discontinued Operations
|
46,172
|
|
|
(244,317)
|
|
Depreciation,
Depletion and Amortization
|
160,067
|
|
|
149,709
|
|
Non-Cash Other
Post-Employment Benefits
|
—
|
|
|
(10,366)
|
|
Stock-Based
Compensation
|
5,624
|
|
|
7,481
|
|
Loss (Gain) on Sale
of Assets
|
7,265
|
|
|
(2,145)
|
|
Loss on Debt
Extinguishment
|
—
|
|
|
67,734
|
|
Gain on Commodity
Derivative Instruments
|
(55,060)
|
|
|
(90,145)
|
|
Net Cash Received in
Settlement of Commodity Derivative Instruments
|
84,331
|
|
|
30,141
|
|
Deferred Income
Taxes
|
(27,127)
|
|
|
200,300
|
|
Equity in Earnings of
Affiliates
|
(16,665)
|
|
|
(11,323)
|
|
Return on Equity
Investment
|
4,512
|
|
|
6,103
|
|
Changes in Operating
Assets:
|
|
|
|
Accounts and Notes
Receivable
|
(19,911)
|
|
|
26,664
|
|
Inventories
|
(7,476)
|
|
|
(2,002)
|
|
Prepaid
Expenses
|
19,104
|
|
|
38,356
|
|
Changes in Other
Assets
|
(9,751)
|
|
|
7,037
|
|
Changes in Operating
Liabilities:
|
|
|
|
Accounts
Payable
|
(11,487)
|
|
|
(12,619)
|
|
Accrued
Interest
|
35,867
|
|
|
42,719
|
|
Other Operating
Liabilities
|
849
|
|
|
(80,808)
|
|
Changes in Other
Liabilities
|
(4,147)
|
|
|
(11,569)
|
|
Other
|
4,099
|
|
|
7,909
|
|
Net Cash Provided by
Continuing Operations
|
119,808
|
|
|
197,889
|
|
Net Cash Provided by
Discontinued Operating Activities
|
8,634
|
|
|
30,481
|
|
Net Cash Provided by
Operating Activities
|
128,442
|
|
|
228,370
|
|
Cash Flows from
Investing Activities:
|
|
|
|
Capital
Expenditures
|
(78,968)
|
|
|
(287,804)
|
|
Proceeds from Sales
of Assets
|
8,453
|
|
|
2,108
|
|
Net Investments in
Equity Affiliates
|
(5,578)
|
|
|
(27,992)
|
|
Net Cash Used in
Continuing Operations
|
(76,093)
|
|
|
(313,688)
|
|
Net Cash Provided by
(Used in) Discontinued Investing Activities
|
397,069
|
|
|
(6,215)
|
|
Net Cash Provided by
(Used in) Investing Activities
|
320,976
|
|
|
(319,903)
|
|
Cash Flows from
Financing Activities:
|
|
|
|
(Payments on)
Proceeds from Short-Term Borrowings
|
(100,500)
|
|
|
760,500
|
|
Payments on
Miscellaneous Borrowings
|
(2,128)
|
|
|
(2,464)
|
|
Payments on Long-Term
Notes, including Redemption Premium
|
—
|
|
|
(1,261,009)
|
|
Net Proceeds from
Revolver - CNX Coal Resources LP
|
15,000
|
|
|
—
|
|
Distributions to
Noncontrolling Interest
|
(5,413)
|
|
|
—
|
|
Proceeds from
Securitization Facility
|
—
|
|
|
32,669
|
|
Proceeds from
Issuance of Long-Term Notes
|
—
|
|
|
492,760
|
|
Tax Benefit from
Stock-Based Compensation
|
—
|
|
|
15
|
|
Dividends
Paid
|
(2,294)
|
|
|
(14,400)
|
|
Issuance of Common
Stock
|
3
|
|
|
1,736
|
|
Purchases of Treasury
Stock
|
—
|
|
|
(71,674)
|
|
Debt Issuance and
Financing Fees
|
—
|
|
|
(18,257)
|
|
Net Cash Used in
Continuing Operations
|
(95,332)
|
|
|
(80,124)
|
|
Net Cash Used in
Discontinued Financing Activities
|
(14)
|
|
|
(14)
|
|
Net Cash Used in
Financing Activities
|
(95,346)
|
|
|
(80,138)
|
|
Net Increase
(Decrease) in Cash and Cash Equivalents
|
354,072
|
|
|
(171,671)
|
|
Cash and Cash
Equivalents at Beginning of Period
|
72,578
|
|
|
176,989
|
|
Cash and Cash
Equivalents at End of Period
|
$
|
426,650
|
|
|
$
|
5,318
|
|
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SOURCE CONSOL Energy Inc.